Zinc Price Outlook

Zinc prices remain elevated well into the fourth quarter and are currently hovering around the ten-year highs observed in early October. On 3 November, zinc traded at USD 3,251 per metric ton, which was 1.9% lower than on the same day of last month but was up 27.1% on a year-to-date basis. The price was 31.4% higher than on the same day last year.
Supply-side factors continue to be largely behind the surge in zinc prices this year. Crackdown on pollution and mine safety by the Chinese government has resulted in reduced production or the closure of various zinc mines across the country. Output cuts in key zinc-producing countries in previous quarter have also contributed in pushing prices higher. Additionally, reports of declining inventories and the latest demand forecast for the commodity suggests that the market will remain tight for the foreseeable future. Demand for zinc is expected to increase in 2018 at a similar rate as in 2017, thus pushing prices higher as supply remains tight. Moreover, increased zinc output in the short-term is not expected to have any meaningful impact on prices since existing demand exceeds supply nor it is anticipated that mines that are currently close will resume operations soon. Due to all these factors, zinc prices are set to remain elevated.